Transaction & Analysis Recording, Part I
Summary
TLDRThis video discusses the fundamental phases of accounting, focusing on recognizing transactions as accountable events and recording them properly. It covers essential steps like maintaining source documents, journalizing, and posting transactions to ledgers. The presentation emphasizes the importance of the double-entry system and highlights the phases of accounting: measuring, classifying, summarizing, and interpreting financial data. It also explains the role of source documents such as invoices, receipts, and checks, which are critical for accurate financial reporting and decision-making.
Takeaways
- 🧾 Accounting involves identifying, measuring, classifying, summarizing, and interpreting financial data.
- 📑 Source documents, such as invoices and receipts, are crucial for tracking and recording business transactions.
- 🗂️ The double-entry system brings balance and accuracy to accounting records.
- 📊 There are four phases of accounting: measuring, classifying, summarizing, and interpreting.
- 💼 Recording transactions systematically and in chronological order is fundamental in bookkeeping.
- 📋 The general journal is the book of original entry where business transactions are first recorded.
- 💰 Source documents are used to verify transactions and provide evidence for auditors.
- 📈 The interpretation phase of accounting helps make meaningful decisions by analyzing financial data.
- 💳 Documents like bank statements and purchase orders serve specific roles in recording financial activities.
- 👨💼 Employee attendance is tracked using daily time records (DTR) or biometrics to monitor hours worked.
Q & A
What are the four basic phases of accounting mentioned in the presentation?
-The four basic phases of accounting are measuring, classifying, summarizing, and interpreting financial data.
Why is communication considered important in the accounting process?
-Communication, though not formally considered one of the accounting phases, is crucial because accounting information must be properly communicated to the relevant parties after reports are analyzed.
What is the purpose of source documents in accounting?
-Source documents provide evidence of transactions and events, which are then used as the basis for journal entries. They include items such as sales invoices, receipts, bank statements, and checks.
What role does the double-entry system play in accounting?
-The double-entry system brings balance to the accounting process by ensuring that every financial transaction affects at least two accounts, maintaining equilibrium in the financial records.
What is the difference between official receipts and sales invoices in the Philippines?
-In the Philippines, official receipts are required for the sale of services, while sales invoices are required for the sale of goods. Official receipts confirm payment for services, and sales invoices confirm payment for goods.
What is the significance of the summarizing phase in accounting?
-The summarizing phase organizes financial data after an accounting period, such as a month or year, into a format that is easy to understand for both internal and external users.
How does the classifying phase help in accounting?
-The classifying phase involves sorting and grouping similar items into specific categories or accounts, allowing systematic analysis of recorded data, such as grouping travel expenses under one account.
What is the purpose of a bank statement, and how is it different from a statement of account?
-A bank statement lists all transactions for a bank account over a period, including deposits, withdrawals, and balances. A statement of account outlines transactions between a buyer and a seller, focusing on outstanding balances. The key difference is the issuer: a bank statement is issued by a bank, while a statement of account is issued by a business.
What does 'measuring' in accounting involve?
-Measuring in accounting refers to assigning monetary values (like peso amounts) to accountable economic transactions and events, helping quantify their impact on financial records.
How are checks used in financial transactions?
-Checks direct a bank to pay a specific sum to a designated party. They allow monetary transactions without physical currency exchange, making them safer for transferring large sums of money compared to cash.
Outlines
📚 Introduction to Transaction Recording and Accounting Phases
This paragraph explains the importance of recognizing transactions as accountable events and their recording in accounting books. It emphasizes the significance of keeping source documents intact, timely journal entries, and posting them into the ledger. The double-entry system and its role in balancing the accounting process are introduced. The phases of accounting, including measuring, classifying, summarizing, and interpreting financial data, are outlined. Proper communication of accounting information and reports like income statements and balance sheets, along with the use of graphs and ratios, are also stressed.
📝 The Definition and Purpose of Accounting
This section recalls the American Accounting Association’s definition of accounting as the process of identifying, measuring, and communicating economic information to enable informed decisions. The paragraph details the components of the accounting cycle, starting with identifying events through source documents, which serve as the basis for journal entries. The importance of source documents, such as invoices and bank statements, in analyzing financial performance and position is highlighted, along with how these documents affect accounting records and decisions.
💵 Official Receipts and Sales Invoices in Business Transactions
This paragraph explains the importance of official receipts (ORs) in Philippine business transactions, particularly for services. The difference between an OR and a sales invoice is clarified, with the OR being used for services and the sales invoice for goods. Sales invoices detail items purchased, payment terms, and possible discounts. The paragraph also explains payment terms like net 30 days and the implications of prompt payments.
🏦 Understanding Bank Deposits and Bank Statements
Here, bank deposit slips and bank statements are discussed. A deposit slip records the details of funds deposited into a bank account, including account number and amount. Bank statements summarize all account transactions for a month, helping users track their deposits, withdrawals, and expenses. The paragraph emphasizes the importance of reviewing bank statements to monitor spending and detect fraudulent activities.
💰 The Role of Checks and Purchase Orders
This section explains how checks work as a secure way to transfer money without physical currency. The paragraph details the elements of a check, such as date, payee line, and memo. Different types of checks, like certified and payroll checks, are introduced. The role of purchase orders in clearing logistical confusion is also explained, distinguishing them from invoices. Purchase orders confirm what was ordered, while invoices are issued to request payment after goods or services have been delivered.
⏰ Time Records and Biometrics in Employee Management
The final paragraph focuses on time records and biometrics in monitoring employee attendance and work hours. Daily time records (DTRs) and biometrics systems are described as tools used by companies to track employee presence and manage time effectively. Biometrics machines provide additional support for DTRs, ensuring accurate time monitoring for payroll and management purposes.
Mindmap
Keywords
💡Source Documents
💡Journalizing
💡Ledger
💡Double Entry System
💡Accounting Phases
💡Summarizing
💡Interpreting Financial Data
💡Income Statement
💡Accounting Cycle
💡Bank Statement
Highlights
Importance of keeping source documents intact for accurate transaction recording.
The double-entry system brings balance to the entire accounting system.
Four basic phases of accounting: measuring, classifying, summarizing, and interpreting financial data.
Accounting communication, while not formally a phase, is crucial for informed judgment and decision-making.
Measuring phase assigns peso amounts to accountable economic transactions.
Classifying phase groups similar items under designated categories, such as travel expenses.
Summarizing phase presents data at the end of each accounting period in a clear, understandable format.
Interpreting financial data allows end-users to make meaningful judgments about a business's financial conditions.
Recording or journalizing is the phase where financial transactions are recorded systematically and chronologically.
Source documents, such as sales invoices, official receipts, and bank statements, initiate the accounting process.
Cash register tapes contain detailed information about purchases, including clerk number and transaction details.
Official receipts (OR) are essential in the Philippines for documenting the sale of services.
Sales invoices record sales of goods, including item details, discounts, and payment terms.
Bank deposit slips and statements track and verify transactions, deposits, and withdrawals for account holders.
Checks provide a secure way to transfer funds without exchanging physical currency, especially for large sums.
Transcripts
[Music]
to easily comprehend this topic it is
very important to draw an
outline on how a transaction is being
recognized
as an accountable event and eventually
entered in the accounting books
in this presentation you will learn the
importance of keeping source documents
intact
prompt recording of transactions into
the journal and posting
the recorded transactions into the
ledger and you will learn to appreciate
the double entry system and the balance
it brings into the whole accounting
system
there are four basic phases of
accounting such as measuring classifying
summarizing and
interpreting financial data
communication may not be formally
considered one of the accounting phases
but it is a crucial step as well all
accounting
information should be communicated
properly to the appropriate parties
after analyzing accounting reports
must be prepared and distributed and
should
include the basic income statement and
balance sheet
as well as additional information
including accounting ratios
diagrams graphs and funds flow
statements
thus let us discuss authority the four
basic phases of accounting according to
their technical definition
measuring is the assigning of peso
amounts
to the accountable economic transactions
and events
the classifying phase of accounting
involves
sorting and grouping similar items
under the designated name category or
account this phase uses systematic
analysis of recorded data in which all
transactions
are grouped in one place for example
travel expenses might be a category that
accountants use to classify
expenses relating to company travel
the term ledger refers to the book in
which
classifications are recorded
summarizing phase of accounting involves
summarizing the data after each
accounting period such as
a month quarter or a year
the data must be presented in a manner
which is easy to understand
and use by both external and internal
users of the accounting statements
graphs and other visual elements are
often used
to complement the text data the
interpreting phase of the accounting
process
is concerned with analyzing financial
data
and is a critical tool for decision
making
this final function interprets the
recorded data in a manner which
allows end users to make meaningful
judgments
regarding the financial conditions of a
business
or personal account as well as the
profitability of business operations
this data is then used to prepare future
plans
and frame policies to execute financial
plans
let us discuss also the basic definition
of recording or journalizing despite the
fact
that the focus of business right is on
the four basic phases only
so to integrate recording is a basic
phase
of accounting that is also known as
bookkeeping
in this phase all financial transactions
are recorded in a systematical
and chronological manner in the
appropriate books or databases
accounting recorders are the documents
and books involved
in preparing financial statements
accounting recorders
include records of assets liabilities
ledgers journals and other supporting
documents such as invoices and checks
note that business transactions are
originally recorded in the book of
original
entry called general journal and beneath
the recording phase or identifying and
measuring
the phases of accounting such as the
measuring and classifying are usually
done during the period
and the summarization and interpretation
are done
at the end of the period the tasks
involved are analyzing identifying
measuring recording and classifying
remember one of the definitions of
accounting provided by american
accounting association
in the statement of basic accounting
theory and my discussion
on the first presentation this
definition
provided by american accounting
association has institute
the test of time let's recall accounting
is
the process of identifying measuring
communicating economic information
to permit informed judgment and decision
by users of the information
thus it states the very purpose of
counting
which is to provide quantitative
information
useful in making an economic decision
its components are identifying the
analytical component
measuring the technical component and
communicating the formal component
the accounting cycle refers to a series
of sequential steps or procedures
performed to accomplish the accounting
process
the first step in the accounting cycle
is identification of events to be
recorded
and it aims to gather information about
transactions or events generally through
the source documents
thus since the first step is
identification of events to be recorded
in the journal that means to say that
the task
involved is identified
and it aims to determine as well which
events are to be recorded as accounting
transactions
transactions and events are the starting
points in the accounting cycle
by relying on source documents
transactions and events can be analyzed
as to how they will affect performance
and financial position
source documents identify and describe
transactions and events
entering in the accounting process this
original written evidences contain
information about the nature and the
amounts of the transactions
these are the basis for journal entries
some of
the more common source documents are
sales invoices
cash registered tips official receipts
bank deposit sleep bank statements
checks purchase orders time cards and
statements of account
thus the source documents are simply the
evidence of events
and it starts the process
it describes transactions it contains
information about transacting parties
and others
[Music]
source documents are the physical basis
upon which
business transactions are recorded
source documents are typically retained
for use as
evidence when auditors later review a
company's
financial statements and need to verify
that transactions have enforced
they usually contain the following
information
a description of a business transaction
the date of the transaction a specific
amount
of money an authorizing signature
many source documents are also stomped
to indicate an approval
or on which to write down the current
date or the accounts to be used
to record the underlying transaction
a source document does not have to be a
paper document
it can also be electronic such as an
electronic record of the hours
worked by an employee as entered into a
company's timekeeping system
through a smartphone
cash register tips provide a wealth of
information
but most people never really notice
what's there
look closely though and you can spot far
more than a list
of prices more registered tips also
carry merchant information
identify the checker and provide details
about each item purchased
the exact placement of data varies from
store to store but most
modern cash registers have the ability
to print a great deal of information on
the receipt
we have here an example of a cash
register tape
which contains the following information
such as
the date and time the clerk number
the clerk name the consecutive number
the register number and the unit price
of each item
and the text simply represents the items
such as the following jacket pants shirt
belt and also it contains the
merchandise
subtotal and the tax total amount
and the total amount of the invoice such
as
296.80
the cash standard which is 300
dollars so the first standard is simply
the amount
of money given by the buyer
to the cashier and then we have here the
cash
change which is 13 pesos
and then the cash change which is three
point
and then the cash change which is three
point
twenty dollars
and then the cash change which is three
point twenty dollars
thus you have actually seen the source
document especially when you are buying
or purchasing a merchandise
from an establishment they usually use
cash register tips
next is official receipts if you are
involved
in business in any way in the
philippines you should be familiar with
the official receipt
or or where is the or from that supplier
can you please send us the or before the
end of this week
we can close our books this month
until we find those ors
so what's all the fuss about why are
people always
talking about official receipts whether
your business sells or
buys services you need to understand
your rights and responsibilities when it
comes to official resides
in the philippines an official receipt
or or is a document that provides
evidence of a sale of a service by or
to a business official receipts should
be issued by the business performing the
service
immediately upon receipt of payment from
a customer for
that service next is sales invoice
a sales invoice or sales field
is an essential and common document used
by all
kinds of companies companies
use sale invoices to inform customers of
the amount
they own in exchange for goods or
services that were sold the sales
invoice
should include which items the customer
purchased
how many of the items were purchased
any discounts received and the total
amount
most sale invoices will always include
information
as to when payment is expected the total
earnings of a business
include the total amount of all sales
invoices plus any additional income it
may have
earned from various activities a sales
invoice will include information
regarding when the payment is expected
to be received
some of the standard payment terms are
zhu net 30 days
1 over 10 net 30 days 2 over 10
net 30 days the first two terms indicate
that no discount will be applied for
prompt payment
drew upon receipt means that the payment
is true
as soon as the invoice is received
whereas net 30 days means that
the payment must be received within
30 days the last two terms indicate
that a discount is offered if the
payment is made within the indicated
days
in this example a payment term of 1
over 10 net 30 days means
that a customer can take one percent of
the net amount
owed if the invoice is paid within 10
days of
the invoice date 2
over 10 net 30 days indicates
that a 2 discount will apply
if the invoice is paid within 10 days
if this deadlines are not met then the
full amount
will be due within 30 days
before going to the next example of
source document
let us first discuss the distinction
between official receipts
and sales invoices in the philippines
official receipts are only required for
the sale of a service
a sales invoice is a different document
and is required in the case of a sale of
goods
a sales invoice provides evidence that
the sale of goods has occurred
and that payment has now become due for
those
groups once payment is received
a collection receipt which is different
than an official recipient
when issued to confirm the payment for
and the sale of goods
bank deposits tips deposit sleep is a
small paper
form that a bank customer includes when
depositing funds into a bank account
the deposit sleep by definition contains
the date the name of the depositor
the depositor's account number and the
amounts being deposited
i guess all of you already knows how a
deposit sleep looks like
and you might have already tried
depositing a certain sum of money
into a bank by simply filling up
the bank deposits leak
as you can see here on the following
examples you can find details regarding
the
the purpose of the sum of money
being tendered to the bank it might
probably be for
deposit or simply for payment of
bills the type of the account whether
savings or current account and
the currency of the amount being
deposited
the account number and the depositors or
simply merchant's name if you are to pay
a bill
and the type of deposit or payment
whether it is
tendered in cash or simply in check
so the total deposits are payment which
amounts to 5 000 pesos
so you can see details as such
when filling up about deposit sleep or
when receiving a bank deposit
next is bounce statements
a bank statement is a document also
known as
an account statement that is typically
sent
by the bank to the account holder every
month
summarizing all the transactions of an
account during the month
bank statements contain bank account
information
such as account number and a detailed
list
of deposits and withdrawals
the bank statement is a list of all
transactions
for a bank account over asset period
usually monthly
the statement includes deposits
charges withdrawals as well as
the beginning and ending balances for
the period
account holders generally review their
bank statements
every month to help keep track of
expenses
and spending as well as monitor for any
fraudulent charges
or mistakes you might be wondering
how a bank statement works a bank issues
a bank statement to an account holder
that shows
the detailed activity in the account it
allows
the account holder to see all the
transactions
processed on their account banks usually
send monthly statements to an account
holder on a set date
in addition transactions on a statement
typically appear in a chronological
order
a statement of account also known as
an account statement or customer
statement
is a document that outlines the
transactions between a buyer and a
seller
account statements can serve a few
different purposes
by listing every transaction between a
business and a customer
a statement of account can be used to
calculate
an outstanding account balance remind
a customer to settle their account
balance
avoid disputes with customers
and it isn't common to use an account
statement
to remind a customer to pay a single
overview invoice
instead you should send a reminder
letter
thus before going to the next example of
source document again let us
differentiate
the statement of accounts
and the bank statement as we have
discussed a while ago
the statement of account and about
statement
are similar when it comes to their
purpose
and that is to remind the client
or the buyer as to their accounts
outstanding balance
[Music]
however the difference lies only on
identifying who
is the issuer of the source document
so for the statement of account the
issuer
is the sender and for about statement
the issuer is the bank of course
so that is simply the difference
furthermore the bank statement contains
not only of
the charges but also of the deposits
and withdrawals of the account holder
a check is a written dated and signed
instrument that directs a bound to pay a
specific sum of money to the bearer
it is another way to instruct about to
transfer
funds from the payers account to the
payee
or the person's account check features
include the date the payee line
the amount of the cheque the payers
endorsement
and a memo life types of checks
include certified check cashiers checks
and payroll checks also called paychecks
how checks work a check is a bill of
exchange or document
that guarantees a certain amount of
money
it is a printed for the drawing bank to
give an account holder
the payer to use the payer writes
the cheque and presents it to the payee
then takes it to their bank or other
financial institutions
to negotiate for a cash or to deposit
into an account the use of
checks allows two or more parties to
make a monetary
transaction without the need of actually
exchanging physical currency
instead the amount for which the check
is written is a substitute
for a physical currency of the same
amount
checks can be used to make bill payments
as
gifts or to transfer sums between two
people or
entities they are generally seen as a
more secure way of
transferring money than cash especially
when there
are large sums involved if a check is
lost or stolen a third party is not able
to cash it
as the peggy is the only one who can
negotiate the check
modern substitutes for checks include
debit and credit cards
wire transfers and internet banking just
imagine receiving your monthly salary
amounting to 5 million
pesos in cash of course
there is a tendency that you might be
kidnapped
or hold up because of that
matter thus having large
sums of money in your pocket would
really bring you danger
next is purchase order a purchase order
is a document
sent from a purchaser to a vendor to
confirm a specific purchase of
goods or services one little document
can
go a long way in clearing up the
logistical confusion of a growing
business
how are poor chase orders different
from an invoice a purchase order
is issued by the buyer who wants to make
sure that
they got exactly what they ordered while
an invoice
is issued by the vendor wants to make
sure
they get paid porsche's orders are sent
by the buyer to the vendor first and
they outline exactly what the order
should contain
and when it should arrive it
include things like quantity of items
detailed descriptions of the items the
price
date of purchase and payment terms
a vendor sends an invoice only after
they have
approved the purchase
when invoicing vendors usually include
the purchase order number
included on the original purchase order
so that
finance can make sure the information on
both
forms is the same next
is time record it involves the process
of monitoring and organizing
time information far from just
being a way to monitor the attendance of
an employee
having a ddr system allows a company to
effectively manage
its employees by providing adequate data
so formerly what is being used in order
to monitor
the employees attendance is daily time
records
so this is really helpful in order to
track
whether the employee is really present
during office hours
but now what is being used as the
biometrics machine which is
just then supported by a dtr
the monitoring of the employee's time
provided to the company is made issued
through
the biometrics machine
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